- The Washington Times - Friday, November 2, 2001

As the British government announced the deployment of 4,200 troops, including the elite winter warfare troops of the Royal Marine Commandos, British officials negotiating other matters with their American counterparts were rubbing their eyes in disbelief at the way they and British interests were being treated.
The only reliable ally that America has, the country whose Prime Minister Tony Blair won a standing ovation by both houses of Congress last month for his unconditional support "to the end" of the American war on terrorism, was being treated like an unreliable and enemy power.
First, American regulators of the insurance market decided to reverse their earlier ruling and demand that the vast London-based Lloyd's insurance group pay $3.75 billion up front for claims that may emerge from the September 11 terrorist attacks on New York. The claims are not yet in, much less assessed. Moreover, these are the gross claims, which are certain to be much reduced probably cut in half as Lloyd's recovers much of the money from the reinsurance it placed. But the U.S. National Association of Insurance Commissioners wants the money deposited up front even though Lloyd's has never yet defaulted on a claim in more than three centuries of doing business.
Initially, the U.S. regulators had said Lloyd's could follow the usual rule of depositing only 60 percent of the estimated total liability. But last week, they changed their minds and demanded the lot. After intense negotiations, with British and U.S. government officials becoming involved, a kind of compromise was reached. Lloyd's will deposit 60 percent of the sum by Nov. 15 and the rest on March 31.
Neutral Switzerland does not have a single soldier or airman supporting the American war on terrorism, but the giant Swiss Re insurance conglomerate is not being treated like this. Munich Re is another giant reinsurance group with big liabilities in New York. It is based in Germany, which failed to send any troops to the Gulf War (it sent money instead) and which has yet to send troops to match its promises of full support for the Americans. And Munich Re is not being treated as roughly as Lloyd's.
"The lesson seems to be that we shouldn't have been so instinctive and so eager to help the Americans. It just means you get taken for granted," one of the British negotiators told this correspondent after the compromise was finally reached.
And at least two more of the Brits involved in the final meetings were then dashing across town for another meeting. This time, they were teaching their American colleagues at Washington's request how the British had set up a government-backed pool reinsurance scheme after the wave of Irish Republican Army terror attacks on the city of London. Worried at the prospect of the U.S. insurance market "going off a cliff" (in the words of U.S. Treasury Secretary Paul O'Neill) on Jan. 1, when American insurers change their rates to allow for the terrorism factor, the Americans are turning to London for advice. And they do so at the same time that they turn the screws on Lloyd's.
Take a second example. British and American officials were last week negotiating an "open-skies" agreement to bring a bit more competition to the way their airlines carve up the trans-Atlantic routes into London's Heathrow Airport. The British view is simple: Open skies should mean what it says. British airlines should have the right to buy into American airlines, and compete for American passengers anywhere in the United States. The Americans, despite the claim to be the home and defenders of free markets, do not want foreign competition, and insist on keeping foreign airlines out of the U.S. market, while demanding freedom to operate in Britain and Europe.
"Before I came over here, I really believed that the U.S. believed in competition and deregulation. I've certainly been cured of that delusion," says one British official involved in the "open skies" talks. "In fact, I'm even starting to wonder whether we are seen as a friendly nation at all even though some of my American counterparts tell me in coffee breaks how moved they have been by Tony Blair's speeches. And than back at the negotiating table, it's as if we were the Soviet Union."
Well, alliances are alliances and business is business, and it may be a mistake to confuse the two. And the closeness of the two countries in the commercial sphere was also on display last week, when the Pentagon announced that the Lockheed-Martin consortium had beaten Boeing to become lead contractor for the $200 billion project for the Joint Strike Fighter. BAe (or British Aerospace) is a partner with Lockheed in the project, and is the only foreign contractor categorized as effectively American. But then, Britain's Royal Navy and Royal Air Force are prime contractors for the fighter, along with the Pentagon.
Still, the tactics of the U.S. insurance regulators and of the open-skies negotiators have left a very sour taste in the mouths of the only other country whose troops are fighting alongside the Americans. It won't stop the Brits doing what they know to be the right thing. But it does leave them asking whether the Americans really understand what friends are for.

Martin Walker is the chief international correspondent for United Press International.


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